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Exhibit 10.12
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is executed and effective as of the 1st
day of June, 1998, by and between XXX XXXXXX an individual ("Employee"), and
WAREFORCE INCORPORATED, a California corporation (the "Company"), with reference
to the following facts:
Employee is an individual possessing unique management and executive talents of
value to the company and has been the Vice President of Finance, Chief Financial
Officer ("CFO") and Chief Operating Officer ("COO") of the Company.
The Company desires to continue the employment of Employee as the Vice President
of Finance, CFO and COO, and Employee desires to accept such employment, all on
the terms and conditions set forth in this Agreements.
AGREEMENT
In consideration of the foregoing recitals and of the covenants and agreements
herein, the parties agree as follows:
1. The Company hereby engages Employee to perform the duties and render the
services set forth in Sections 2 for a period commencing on June 1, 1998
(the "Start Date") and ending on the third anniversary of such date,
(the "Employment Period") and Employee hereby accepts said employment
and agrees to perform such services during the Employment Period. Unless
this Agreement is terminated pursuant to Section 4 or unless either
party gives the other written notice to the contrary at least six (6)
months prior to an expiration date, this Agreement, together with any
changes which have occurred during the employment period then expiring,
shall automatically renew at the end of an Employment Period for an
additional one (1) year employment period.
2. DUTIES
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2.1. VICE PRESIDENT OF FINANCE, CFO AND COO: Performing executive
work of major importance to the Company, with the primary focus
being the profitable management and profitable growth of the
Company as a whole. During the Employment Period, Employee shall
devote his full business time and attention to performing his
duties as Vice President of Finance, CFO and COO of the Company.
He shall 1) continue to build and supervise operations teams to
profitably purchase, inventory and deliver the Company's
products and services to customers in territories associated
with all of the Company's branches, subsidiaries and divisions
in the United States and worldwide; 2) manage the overall
financial direction, coordination, and evaluation of the Company
and its subsidiaries and divisions to achieve or exceed both the
earnings-per-share and gross revenue targets of the Company; 3)
assist the Chief Executive Officer in formulating and
administering Company policies; 4) review and analyze the
activities costs, operations of the Company to define and to
track their progress toward achieving their goals and
objectives; 5) carry out supervisory responsibilities in
accordance with Company policies, and applicable laws; 7)
interview, hire and train sales managers and staff; 9) plan,
assign and direct the work of managers and staff; 8) plan,
assign and direct the work of operations and
accounting/financial managers and staff, appraise their
performance, and reward and discipline them, and address their
complaints; 9) manage the audit function of the Company,
including ensuring the timely completion of the Company's annual
audit; 10) manage all financial and reporting aspects associated
with the Company being a publicly-held company; 12) manage the
cash resources of the Company, including managing banking
relationships; 13) submit all required documentation in a timely
and accurate manner. The above description of duties is
non-exhaustive. Employee shall work out of the Company's
headquarters location and shall report to Company's Chief
Executive Officer. The above description of duties is
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non-exhaustive. Employee recognizes that the Board of Directors
of the Company may be required under its fiduciary duty to the
Company and to its stockholders to eliminate such position or to
appoint a different person as such officer of this Company. The
parties agree however, that any such elimination or replacement
of Employee by the Company, other than pursuant to Section 4.2.1
or 4.3.2. hereof, shall constitute a termination of Employee's
employment hereunder by the Company without cause.
2.2. CHANGE OF CONTROL. If the Company or a significant portion
thereof is sold or merged or undergoes a change of control
transaction (as defined in the Company's Stock Option Agreement,
a copy of which is attached hereto as Exhibit A), this Agreement
shall survive consummation of such transaction and shall
continue in effect for the remainder of the Employment Period,
but Employee shall serve as an officer of the entity which
succeeds to the business or a substantial portion of the
business of the Company, and is such case shall bear a suitable
title and perform the duties and functions of such office of
such publicly traded or privately held successor, consistent
with those customarily performed by an officer of such a unit,
division or entity comparable to the then business of the
Company, unit, division or entity. Employee may be required to
accept greater or lesser responsibility by any successor, and
agrees to fully cooperate and assist in any resulting transition
for up to the remainder of the Employment Period; and any
adjustments required of Employee to complete the transition to
any successor, unit, division or entity, shall not violate this
Agreement so long as "good reason" does not arise under Sections
4.6.2(ii), (iii) or (v). This Agreement shall apply to the
automatic modification in duties resulting from such transaction
as set forth above, however, notwithstanding the foregoing,
Employee any exercise any "good reason" rights he may have under
Section 4.6.2(iv).
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2.3. CONFLICT OF INTEREST. Employee agrees that during the term of
employment Employee will not, directly or indirectly, compete
with the Company in any way, or usurp an Company opportunity in
any way, nor will employee act as an officer, director,
employee, consultant, shareholder, lender or agent of any entity
which is engaged in any business in which the Company is now
engaged or in which the Company becomes engaged during the term
of employment. The Company is now engaged in the business of
reselling computer hardware, software and peripherals, primarily
to corporate and governmental accounts, and in the business of
selling computer systems consulting, help and maintenance
services, also primarily to corporate, education and
governmental accounts. The Company is not now engaged in the
business of manufacturing computers or their primary components,
nor is it now in the business of reselling computers to non-end
users. The Company may become engaged in the business of final
assembly of computers and may become engaged in the business of
catalog, mail-order or internet sales of computer hardware,
software and peripherals. Employee also agrees that during the
term of employment, Employee will not, directly or indirectly,
whether on his own behalf or on behalf of another, offer
employment or a consulting assignment to any Company employee,
nor will Employee, nor Employee's employer, directly or
indirectly, whether on his own behalf or on behalf of another,
actually employ or grant a consulting assignment to any Company
employee. Employee also agrees that during the term of
employment Employee will not, directly or indirectly, whether on
his own behalf or on behalf of another, contact or solicit any
of Company's clients to do business with any entity other than
Company.
2.4. During the term of employment with the Company, Employee may
have access to and become acquainted with information of a
confidential, proprietary or secret nature which is or may be
either applicable or related to present or
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future business of the Company, its research and development, or
the business of its customers. For example, trade secret
information includes, but is not limited to devices, secret
inventions, processes and compilations of information, records,
specifications and information concerning customers or vendors.
Employees shall not disclose any of the above-mentioned trade
secrets, directly or indirectly or use them in any way, either
during the term of this agreement of at any time thereafter,
except as required in the course of employment with the Company.
2.5. Employee agrees that all customers of the Company, for which the
Employee has or will provide services during the Employee's
employment by the Company, and all prospective customers from
whom the Employee has solicited business while in the employ of
the Company, shall be solely the customers of the Company.
2.6. Employee agrees that, for a period of twelve (12) months
immediately following the termination of employment with the
Company, Employee shall neither directly nor indirectly solicit
business as to products or services competitive with those of
the Company, from any of the Company's customers with whom the
Employee had contact within twelve (12) months prior to the
Employee's termination.
2.7. Employee further agrees that for a period of twelve (12) months
after termination of employment, Employee will not directly or
indirectly induce or solicit any of Company's employees to leave
their employment.
3. COMPENSATION. As compensation for his services to be performed
hereunder, the Company shall provide Employee with the following
compensation and benefits:
3.1 BASE SALARY. Employee's base salary shall be $135,000.00 per
year, subject to an annual increase (if any) in the sole
discretion of the Board, payable in accordance with
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the Company's payroll practices as in effect from time to time,
and subject to such withholding as is required by law.
3.2 BONUSES.
3.2.1. Employee shall receive a $10,000 signing bonus upon the
Company's completion of an Initial Public Offering,
Reverse Merger or other similar public financing,
subject to such withholding as is required by law.
3.2.2. Employee shall receive an annual bonus of $50,000.00
should the Company achieve at least 90% of the goals set
by the Company's Board of Directors for the Employee for
the year. If any bonus is declared or paid, it shall be
subject to such withholding as is required by law.
3.3. BENEFITS.
3.3.1. VACATION. Employee shall be entitled to vacation time as
been accrued each pay period since his date of first
hire, less any vacation taken in such amounts and under
such conditions as normally afforded to the Company's
executives. In the event Employee does not use such
vacation, he shall receive, upon termination of the
Employment Period, vacation pay for all unused vacation
calculated as having accrued at the applicable base
salary for each relevant period of his employment.
However, Employee shall endeavor to take vacation time
in the year in which it is allocated to him.
3.3.2. BUSINESS EXPENSES. The Company shall reimburse Employee
for reasonable business expenses incurred by Employee in
the course of performing services for the company and in
compliance with procedures established from time to time
by the Company. This reimbursement shall occur on a
monthly basis, and
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is subject to Employee providing original documentation
in support of all business expenses reimbursement
sought.
3.3.3. STOCK OPTIONS. Company shall grant Employee incentive
stock options on the same terms as granted to its senior
executives (excluding the Company's Chief Executive
Officer). The issuance of options is subject to approval
by the Company Board of Directors Compensation
Committee.
3.3.4. OTHER BENEFITS. Company shall provide Employee with
employment benefits as 401(k) participation, automobile
allowance, medical insurance and disability insurance,
on the terms and to the extent generally provided by the
Company to its senior executive employees.
3.4 OTHER PERSONS. The parties understand that other officers and
employees may be afforded payments and benefits and employment
agreements which differ from those of Employee in this
agreement; but Employee's compensation and benefits shall be
governed solely by the terms of this Agreement, which shall
supersede all prior understandings or agreements between the
parties concerning terms and benefits of employment of Employee
with the Company. Other officers or employees shall not become
entitled to any benefits under this Agreement.
4. TERMINATION.
4.1. TERMINATION BY REASON OF PERMANENT DISABILITY. The Employment
Period shall terminate upon the permanent disability (as defined
in Section 4.6.3 below) of Employee.
4.2. TERMINATION BY COMPANY
4.2.1. The Company may terminate the Employment Period for
"cause" by seven (7) days advance written
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notice to Employee. However, no such advance written
notice shall be given if the Company determines that the
Company or a person would suffer irreparable harm should
the Employee be given notice.
4.2.1.1. For such termination for "cause", the
employee shall have a ninety (90) day period
from the date of the written notice to cure
such "cause". However, this cure period
shall not apply to termination's wherein the
Company's Board of Directors determines that
the Company would suffer irreparable harm
should the Employee be given the right to
cure.
4.2.2. The Company may terminate the Employment Period for any
other reason, with cause other than those described in
Section 4.6.1 or without cause, by thirty (30) days
advance written notice.
4.3 TERMINATION BY EMPLOYEE
4.3.1. Employee may terminate the Employment Period for "good
reason" (as defined in section 4.6.2 below) at any time
by written notice to the company.
4.3.2. Employee may terminate the Employment Period for any
other reason by thirty (30) days advance written notice
to the Company.
4.4 SEVERENCE PAY
4.4.1 In the event the Employment Period is terminated by the
Company for any reason other than pursuant to Section
4.2.1 or Section 4.3.2 hereof or if the Employment
Period is terminated because of a permanent disability
of Employee pursuant to Section 4.1, upon the
effectiveness of any such termination, the Company shall
be obligated to pay
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to the employee (or his executors,administrators or
assigns, as the case may be) all unpaid salary, benefits
and bonuses (if any) accrued through the date of
effectiveness of such termination and, in addition, a
cash severance payment equal to eighteen (18) month's
total base salary at the rates set forth herein, and
such other benefits as may be required by law.
4.4.2 In addition, all stock options and general stock
appreciation rights granted by the Company to Employee
which otherwise would have vested within eighteen (18)
months following the Date of Termination for death or
disability shall accelerate and become fully vested and
exercisable on the Date of Termination for death or
disability, and shall remain exercisable for a period
ending on the normal expiration date specified in the
option agreements.
4.4.3. In the event the Employment period is terminated by the
Company pursuant to Section 4.2.1 hereof, or the
Employment Period is terminated by Employee pursuant to
Section 4.3.2 hereof, the Company shall have no
obligation to pay any severance pay to Employee. The
Company shall, however, be obligated to pay to Employee
(or executors, administrators or assigns, as the case
may be) all unpaid salary, benefits and bonuses (if any)
accrued through the date of termination and shall
provide such other benefits as may be required by law.
4.5 TERMINATION BENEFITS. In the event of termination of the
employment Period pursuant to Section 4.2 or 4.3.1, the Company
shall provide Employee, Employee's spouse or domestic partner
and children, if any, with such normal medical insurance, on the
terms and to the extent generally provided by the Company to its
executive employees on the level comparable to
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Employee, for a period of one year from the date of the
termination of the Employment Period.
4.6 CERTAIN DEFINITIONS. For purposes of this Agreement:
4.6.1. The term "cause" shall mean those acts identified in
Section 2924 of the California Labor Code, as that
section exists on October 1, 1997, to wit, any willful
breach of duty by the Employee in the course of his
employment, or in case of his habitual neglect of his
duty or continued incapacity to perform it.
4.6.2. The term "good reason" shall mean the occurrence of one
or more of the following events without Employee's
express written consent (I) removal of Employee from the
position and responsibilities as set forth under Section
2 above; (ii) a material reduction by the company in the
kind or level of employee benefits to which Employee is
entitled immediately prior to such reduction with the
result that Employee's overall benefit package is
significantly reduced; (iii) the relocation of Employee
to a facility or a location outside of California; (iv)
a change in the control of the Company, or (v) any
material breach by the Company of any material provision
of this Agreement which continues uncured for thirty
(30) days following written notice thereof.
4.6.3. The term "permanent disability" shall mean Employee's
incapacity due to physical or mental illness, which
results in Employee being absent from the performance of
his duties with the Company on a full-time basis for a
period of six (6) consecutive months. The existence or
cessation of a physical or mental illness which renders
Employees absent from the performance of his duties on a
full-time basis shall, if disputed by the Company or
Employee, be conclusively determined by written
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opinions rendered by two qualified physicians, one
selected by Employee and one selected by the Company.
During the period of absence, but not beyond the
expiration of the Employment Period, Employee shall be
deemed to be on disability leave of absence, with his
compensation paid in full. During the period of such
disability leave of absence, the Board of Directors may
designate an interim officer with the same title and
responsibilities of Employee on such terms, as it deems
proper.
4.7. EMPLOYEE BENEFIT PLANS
Any employee benefit plans in which employee may participate
pursuant to the terms of this Agreement shall be governed solely
by the terms of the underlying plan documents and by applicable
law, and nothing in this Agreement shall impair the Company's
right to amend, modify, replace, and terminate any and all such
plans in its sole discretion as provided by law. This Agreement
is for the sole benefit of Employee and the Company, and is not
intended to create an employee benefit plan or to modify the
terms of any of the Company's existing plans.
5. MISCELLANEOUS
5.1 ARBITRATION/GOVERNING LAW. To the fullest extent permitted by
law, any dispute, or claim or controversy of any kind (including
but not limited to tort, contract, and statue) arising under, in
connection with, or relating to this Agreement or Employee's
employment, shall be resolved exclusively by binding arbitration
in Los Angeles County, California in accordance with the
commercial rules of the American Arbitration Association then in
effect. The Company and Employees agree to waive any objection
to personal jurisdiction or venue in any forum located in Los
Angeles County California. No claim, lawsuit or action of any
kind may be filed by either party to this
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Agreement except to compel arbitration or to enforce an
arbitration award; arbitration is the exclusive dispute
resolution mechanism between the parties hereto. Judgment may be
entered on the arbitrator's award in any court having
Jurisdiction.The validity; interpretation, effect and
enforcement of this Agreement shall be governed by the laws of
the State of California.
5.2 ASSIGNMENT. This agreement shall inure to the benefit of and
shall be binding upon the successors and assigns shall
specifically assume this Agreement. Since this agreement is
based upon the unique abilities of, and the Company's personal
confidence in Employee, Employee shall have no right to assign
this Agreement or any of his rights hereunder without the prior
written consent of the Company.
5.3 SEVERABILITY. If any provision of this Agreement shall be found
invalid, such findings shall not effect the validity of the
other provisions hereof and the invalid provisions shall be
deemed to have been severed herefrom.
5.4 WAIVER OF BREACH. The waiver by any party of the breach of any
provision of this Agreement by the other party or the failure of
any party to exercise any right granted to it hereunder shall
not operate or be construed as the waiver of any subsequent
breach by such other party nor the waiver of the right to
exercise any such right.
5.5 ENTIRE AGREEMENT. This instrument, together with the plans
referred to in Section 5, contains the entire agreement of the
parties. It may not be changed orally but only by an agreement
in writing signed by the parties.
5.6 NOTICES. Any notice required or permitted to be given hereunder
shall be in writing and may be personally
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served or sent by United States mail, and shall be deemed to
have been given when personally served or two days after having
been deposited in the United States mail, registered or
certified mail, return receipt requested, with first-class
postage prepaid and properly addressed as follows. For the
purpose hereof, the addresses of the parties hereto (until
notice of a change thereof is given as provided in this Section
5.6) shall be as follows:
If to Employee:
Xxx Xxxxxx
(street address omitted)
Palos Xxxxxx Xxxxxxx, Xxxxxxxxxx 00000
If to the Company:
Wareforce Incorporated
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
1.1. HEADINGS. The paragraph and subparagraph headings herein are for
the convenience only and shall not affect the construction
hereof.
1.2. FURTHER ASSURANCES. Each of the parties hereto shall, from time
to time, and without charge to the other parties, take such
additional actions and execute, deliver and file such additional
instruments as may be reasonably required to give effect to the
transactions contemplated hereby.
1.3. ATTORNEYS' FEES. In the event any party hereto commences
arbitration or legal action in connection with this Agreement,
the prevailing party shall be entitled to its attorneys' fees,
costs and expenses reasonably incurred in such action, and the
amount thereof shall be included in any judgment or award
granted under Section 5.1.
1.4. COUNTERPARTS. This Agreement may be executed simultaneously in
any number of counterparts, each of which
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shall be deemed an original but all, which together shall
constitute one and the same instrument.
1.5. SEPARATE COUNSEL. The Company has been represented by counsel in
the negotiation and execution of this Agreement and has relied
on such counsel with respect to any matter relating hereto. The
Employee has been invited to have his own counsel review and
negotiate this Agreement and Employee has either obtained has
either obtained his own counsel or has elected not to obtain
counsel.
1.6. INDEMNIFICATION. The Company shall provide to the Employee
insurance coverage under its Director and Officer's Insurance
and General Liability, and Employment Practices policies to the
same extent as it provides to all other similar employees of the
Employee's title and position.
1.7. ONLY AGREEMENT. This Agreement supercedes any and all previous
employment agreements Employee may have had with Company.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as of the
day and year first above written.
"EMPLOYEE" "COMPANY"
WAREFORCE INCORPORATED
a California corporation
/s/Xxx Xxxxxx By: /s/Xxxx Xxxxxxxx
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Xxx Xxxxxx Title: CEO
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AMENDMENT NO. 1
TO
EXECUTIVE EMPLOYMENT AGREEMENT
BY AND BETWEEN
XXX XXXXXX AND WAREFORCE, INC.
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THIS AMENDMENT ("Amendment") is executed and effective as of the 14th
day of July, 1998, by and between XXX XXXXXX an individual ("Employee"),
and WAREFORCE INCORPORATED, a California corporation (the "Company"),
and amends that certain employment agreement between Employee and
Company dated June 1, 1998 as follows:
1. Strike Section 3.1 in its entirety and replace with the following" "BASE
SALARY. Employee's base salary shall be $150,000.00 per year, subject to
an annual increase (if any) in the sole discretion of the Board, payable
in accordance with the Company's payroll practices as in effect from
time to time, and subject to such withholding as is required by law."
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as
of the day and year first above written.
"EMPLOYEE" "COMPANY"
WAREFORCE INCORPORATED
A California corporation
/s/Xxx Xxxxxx By: /s/Xxxx Xxxxxxxx
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Xxx Xxxxxx Title: CEO
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